OpenAI prepares confidential IPO filing

1/ OpenAI is preparing a confidential filing for a U.S. IPO in the coming weeks, targeting a public debut later in 2026, according to sources familiar with the matter. The Wall Street Journal first reported the plans on Tuesday, citing people close to the process. 2/ Investment banks Goldman Sachs and Morgan Stanley are advising OpenAI on the IPO, sources told CNBC. A filing could come as soon as Friday, one person briefed on the discussions said. This would allow the AI company to go public without initially disclosing full financials under SEC rules for confidential submissions. 3/ The move follows OpenAI's resolution of a high-profile lawsuit from Elon Musk, who lost his bid to block the company's for-profit restructuring earlier this month. TechCrunch reports OpenAI accelerated IPO preparations after the court ruling cleared a major legal hurdle tied to its corporate structure. 4/ OpenAI's last private valuation hit $157 billion in October 2024 after a $6.6 billion funding round led by Thrive Capital. The company has raised over $40 billion across multiple rounds since 2019, fueled by demand for its ChatGPT and underlying models like GPT-4o. An IPO would test those sky-high private valuations in public markets. 5/ Revenue provides context: OpenAI pulled in $3.7 billion last year and projects $11.6 billion for 2025, per earlier company disclosures. But costs are massive—$7 billion in losses in 2024 alone, driven by data centers and compute from partners like Microsoft. Public markets will scrutinize margins and sustainability. 6/ This positions OpenAI as the frontrunner in the AI lab IPO race. Rival Anthropic told investors it's on track for $10.9 billion in Q2 revenue and its first profitable quarter, despite a $15 billion annual compute deal with SpaceX. CNBC analyst Brad Gerstner said "getting to public markets first is very important" for AI leaders. 7/ xAI, Elon Musk's AI venture, raised $6 billion last year at a $24 billion valuation and is reportedly eyeing its own IPO. Smaller players like Inflection AI have explored public paths too. OpenAI's filing would force private investors to compare frothy AI valuations against real public trading multiples. 8/ Confidential filings buy time: Companies like Uber and Airbnb used them pre-IPO to refine terms amid volatility. OpenAI could debut as early as September, per TechCrunch sources, though market conditions will dictate timing. The process typically takes 4-6 months from filing to roadshow. 9/ Microsoft remains OpenAI's largest backer with a $13 billion investment and exclusive cloud deal. Any IPO would need to address governance ties—OpenAI's capped-profit model limits returns to investors like Microsoft to 100x. Regulators are watching AI concentration closely. 10/ OpenAI CEO Sam Altman has long pushed for public markets to fund the "AGI race." In a January blog post, he wrote: "We believe that open competition toward AGI, with a diversity of actors, will be safer and produce better outcomes." This IPO aligns with that vision, testing if public capital can sustain the pace. End/